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Dominion Announces 2013 Earnings

January 31, 2014

Dominion (NYSE: D) announced unaudited reported earnings determined in accordance with Generally Accepted Accounting Principles (GAAP) for the 12 months ended Dec. 31, 2013, of $1.70 billion ($2.93 per share), compared with earnings of $302 million ($0.53 per share) for the same period in 2012.

Operating earnings for the 12 months ended Dec. 31, 2013, amounted to $1.88 billion ($3.25 per share), compared to originally reported operating earnings of $1.75 billion ($3.05 per share) for the same period in 2012. Operating earnings are defined as reported (GAAP) earnings adjusted for certain items.

Dominion uses operating earnings as the primary performance measurement of its earnings guidance and results for public communications with analysts and investors. Dominion also uses operating earnings internally for budgeting, for reporting to the Board of Directors, for the company's incentive compensation plans and for its targeted dividend payouts and other purposes. Dominion management believes operating earnings provide a more meaningful representation of the company's fundamental earnings power.

The principal differences between GAAP earnings and operating earnings for full year 2013 were charges associated with the sale of Brayton Point and Kincaid power stations and charges related to the repositioning of our Producer Services businesses.

Business segment results and detailed descriptions of items included in 2013 and 2012 reported earnings but excluded from operating earnings can be found on Schedules 1, 2 and 3 of this release.

"Dominion faced a number of challenges in 2013 and we overcame nearly all of them to produce operating earnings that were within our guidance range. Lower operations and maintenance expenses, lower taxes and the benefit from an incremental asset contribution to Blue Racer offset a number of unplanned challenges during the year. Additionally, mild weather reduced earnings by ten cents per share. Excluding the weather impact, operating earnings would have been at the midpoint of our guidance range.

"We continue to refine our business model by focusing our capital on regulated or long-term contracted businesses and assets. To that end, we expect to grow our portfolio of contracted solar projects by nearly 250 megawatts and are in active discussions with multiple parties to achieve this. We anticipate these projects coming on line in both 2014 and 2015. We also have elected to exit the electric component of our unregulated retail energy marketing business. The sale process is underway and we expect to have the transaction complete in the next several months.

"In December, our Board of Directors affirmed the dividend policy it set in December 2012 of a 65 percent to 70 percent dividend payout ratio. The policy recognizes the company's continued shift toward regulated earnings. The board also set a 2014 dividend rate of $2.40 per share of common stock, up from $2.25 per share in 2013, or a 6.7 percent increase. The board recently declared a first-quarter dividend of 60 cents per share of common stock. All dividend declarations are subject to Board of Directors' approval."

Full-year 2013 operating earnings compared to 2012

The increase in full-year 2013 operating earnings per share as compared to originally reported full-year 2012 operating earnings per share is primarily attributable to growth in our electric service territory, higher rate adjustment clause revenues, higher revenues related to our gas transmission growth projects and lower operations and maintenance expenses. Negative factors for the year were lower contributions from unregulated retail marketing operations and producer services.

Details of 2013 operating earnings as compared to 2012 can be found on Schedule 4 of this release.

2014 operating earnings guidance

Dominion expects 2014 operating earnings in the range of $3.35 to $3.65 per share. Incorporated in this guidance, compared to 2013, are a return to normal weather, higher revenues from our capital projects subject to rider treatment, anticipated growth in our electric service territory and a lower effective income tax rate, partially offset by higher operating and maintenance expenses, higher interest expenses, and higher depreciation. First-quarter 2014 operating earnings are expected to be in the range of 85 cents per share to $1.00 per share.

In providing its 2014 operating earnings guidance, the company notes that there could be differences between expected reported earnings and estimated operating earnings for matters such as, but not limited to, divestitures or changes in accounting principles. At this time, Dominion management is not able to estimate the aggregate impact, if any, of these items on reported earnings. Accordingly, the company is not able to provide a corresponding GAAP equivalent for its operating earnings guidance.

Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 23,600 megawatts of generation, 10,900 miles of natural gas transmission, gathering and storage pipeline, and 6,400 miles of electric transmission lines. Dominion operates one of the nation's largest natural gas storage systems with 947 billion cubic feet of storage capacity and serves retail energy customers in 15 states.

This release contains certain forward-looking statements, including forecasted operating earnings for first-quarter and full-year 2014 which are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations may include factors that are beyond the company's ability to control or estimate precisely, including fluctuations in energy-related commodity prices, estimates of future market conditions, additional competition in our industries, changes in the demand for Dominion's services, access to and costs of capital, fluctuations in the value of our pension assets and assets held in our decommissioning trusts, impacts of acquisitions, divestitures, transfers of assets to joint ventures or an MLP and retirements of assets based on asset portfolio reviews, the receipt of regulatory approvals for, and timing of, planned projects, acquisitions and divestitures, the timing and execution of our MLP strategy, and the ability to complete planned construction or expansion projects at all or within the terms and timeframes initially anticipated. Other factors include, but are not limited to, weather conditions and other events, including the effects of hurricanes, earthquakes, high winds, major storms and changes in water temperatures on operations, the risk associated with the operation of nuclear facilities, unplanned outages at facilities in which Dominion has an ownership interest, the impact of operational hazards and catastrophic events, state and federal legislative and regulatory developments, including changes in federal and state tax laws and changes to environmental and other laws and regulations, including those related to climate change, greenhouse gases and other emissions to which we are subject, political and economic conditions, industrial, commercial and residential growth or decline in Dominion's service area, risks of operating businesses in regulated industries that are subject to changing regulatory structures, changes to regulated gas and electric rates collected by Dominion, changes to rating agency requirements and ratings, changing financial accounting standards, fluctuations in interest rates, employee workforce factors, including collective bargaining, counter-party credit and performance risks, adverse outcomes in litigation matters or regulatory proceedings, the risk of hostile cyber intrusions and other uncertainties. Other risk factors are detailed from time to time in Dominion's quarterly reports on Form 10-Q or most recent annual report on Form 10-K filed with the Securities and Exchange Commission.